Hewlett-Packard has agreed to settle with investors who claimed it ignored
"red flags" when it acquired of the British IT company

Mike Lynch, the founder of the British software company Autonomy, faces a court showdown with Hewlett-Packard (HP) and its shareholders, who have set aside their own differences to sue him over alleged accounting improprieties.

HP confirmed on Tuesday it had settled a series of lawsuits from shareholders over its disastrous $11.7bn (£6.5bn) purchase of Autonomy in 2011.

As part of the settlement the company will join forces with its shareholders to sue Dr Lynch and Sushovan Hussain, the former chief financial officer of Autonomy.

The company was sued by its shareholders, however, who alleged it ignored “red flags” around the deal and wasted corporate assets, in breach of fiduciary duty. The plaintiffs claimed HP “knew or should have known” about alleged accounting irregularities and that it tried to back out of the deal without telling its investors.

“We hope this matter will now move beyond a smear campaign based on selective disclosure and HP will finally give a full explanation.”

The size of the loss in November 2012, and the speed with which it occurred, marks the deal as one of the most controversial done by a major company in recent years. As part of its settlement with shareholders, HP said it would implement new oversight over its acquisition processes.